No surprises
as Noel Canning heads to Supreme Court - The National Labor
Relations Board announced on March 12 that it would petition for the U.S.
Supreme Court to review the Noel
Canning decision, issued this past January by the U.S. Court
of Appeals for the District of Columbia Circuit.

The AFL-CIO Executive Council at its recent
annual meeting called the court decision radical and sweeping in its potential
reach, asserting that the situation is "intolerable" and claimed that it was all
just a "sustained and vicious campaign" to derail the NLRB. The AFL-CIO has
called for Democratic leaders in the Senate to use all available means to get
the nominations of the current Board members (Sharon
Block and Richard Griffin, whose "recess" appointments are in question as a
result of Noel Canning, as well as Chairman Mark Gaston Pearce and two
new Republican nominees) confirmed in the Senate and past any Republican
filibuster attempt, threatening those who do not with unspecified political
accountability.

Meanwhile, in the House of Representatives,
Republicans introduced and passed legislation – with a largely partisan majority
– to de-fund any activity by the Board taken without a quorum of valid Members
on the Board. The legislation is unlikely to get through the Senate.

All this comes as the NLRB has finished up a
"lack of quorum" clean-up that was the consequence of an earlier U.S. Supreme Court ruling that declared
two-Member rulings invalid. Just this past January, the Board had "rubber
stamped" the last two of hundreds of decisions that had to be re-decided by
three Members. Then Noel Canning declared that two of the Board's three
Members were invalidly appointed, effectively making it a one-man Board
consisting of Pearce and with no authority to do much of anything.

NLRB Advice
Memorandum strikesdown upholds Boeing code of conduct (wow!) - As our readers know, employer policies and work rules have been under
intense attack by the Board in the past few years. Just about any provision that
could even possibly be read to interfere with employee rights has been found to
be overly broad and unlawful.

Well, here is a bit of good news: The Division
of Advice has upheld Boeing's Code of Conduct, finding that it did
not violate Section 8(a)(1) of the National Labor Relations Act. Even though the
Code of Conduct had language that was potentially overbroad, the Division of
Advice found that it was lawful in the context of the almost 40 pages of
explanations and examples that followed the Code.

Relying on past NLRB decisions, the Division of
Advice noted that the Board has cautioned against reading "particular phrases in
isolation" and urged a view of rules in context. For example, the Division
pointed out that the Code's guidelines described numerous activities that would
undermine the employer's "honesty, impartiality, reputation or otherwise cause
embarrassment," but also that the activities given as examples did not implicate
activities protected by Section 7 of the NLRA. Similarly, the conflict of
interest provision included two pages of examples, and consequently was found to
be "neither overbroad nor ambiguous." The Division also upheld provisions
restricting certain uses of company information because "the ... language does
not specifically reference and restrict information concerning [employees']
jobs." In the past, as noted above, the Board might have viewed the language as
reasonably interpreted to restrict Section 7 activities because it did not
specifically say that information concerning their jobs was excluded.

"So much common sense," one might think. "How
can this be?" Here is a clue: Boeing included the employees' union
representatives when it presented the Code of Conduct at employee orientations.
The Division of Advice found that to be worthy of note:

Additionally, the fact that the Union is present
at new employee orientations where the policy is presented would also lead
employees to believe that the restrictions on new use of Employer assets and
information would not extend to employee communications with their Union
representatives.

It's an open question whether the Board would
take the same position with respect to a policy that applies to a non-union
workforce, or one that was introduced to employees without union involvement.
Employers should continue to be cautious about any case involving a challenged
rule of conduct (including social media policies), given the Board's aggressive
effort at expanding its influence in the non-union sphere and aiding union
organizing efforts. Even Boeing's Code survived only because it had more than 40
pages of policy, examples, and "Q and A"; and an express statement that the
policy did "not apply to employees' constitutional, statutory, or other
protected rights." And, of course, the union was involved in the presentation to
employees. So employers should not be overly optimistic as a result of the
Division opinion, but it's a slim ray of hope.

Court
rejects NLRB effort to expand union leverage through request for corporate
financial information - The U.S. Court of Appeals for the Second
Circuit has refused to enforce an NLRB decision in a case involving an
employer's failure to provide financial information in bargaining. In SDBC Holdings, Inc. v. NLRB, the court refused
to enforce an NLRB holding that Stella D'Oro bakeries had violated its duty to
bargain in good faith.

The importance of this case probably cannot be
overstated.

As background, the National Labor Relations Act
imposes a general duty on employers to bargain in good faith about wages, hours,
and other terms and conditions of employment for represented employees. As the
NLRB has interpreted the NLRA, this duty to bargain includes responses to union
requests for information relevant to bargaining. Generally, if an employer
claims that it cannot afford terms proposed by the union, the employer has to
prove it upon request – by providing the relevant financial information to the
union. This has been the law for many years and has been relatively
non-controversial.

With the extremely pro-union current Board,
unions have realized that litigation at the Board is a source of bargaining
leverage. One way to get leverage (and a Board case) is to use repeated,
intrusive, ambiguous, or burdensome information requests that the employer will
not want to respond to. The SDBC Holdings case is an apparent example
of a union's effort to do that, even when the employer allowed the union to have
access to the information. It took the intervention of a federal Court of
Appeals, and no telling how much disruption and how many dollars in legal fees,
to stop it.

Here, Stella D'Oro was bargaining over a new
contract with a local of the Bakery, Confectionary & Tobacco Workers Union
after the company was acquired by a private equity group. During bargaining, the
company noted operating losses and a need to reduce financial costs, but it
never said that it could not afford to agree to the union's proposals. In
response, the union requested a financial statement. The company provided the
information from a financial statement and offered to make it available
throughout negotiations, but refused to provide a photocopy of the statement
itself because of the fear that it might fall into the hands of a competitor.
The union insisted on a photocopy and filed an unfair labor practice charge.
Eventually, the negotiations broke down, the union went on strike, and the
company implemented its final offer as if impasse had occurred. Later, the union
informed the company that the strikers were ready to return to work, but the
company refused to take them back, taking the position that this was an economic
strike and apparently having already replaced the strikers.

(As one more item of background, economic
strikers can be permanently replaced, but employees striking over unfair labor
practices must be reinstated when they are ready to return to work.)

The Board found that the company had violated the
NLRA by refusing to provide the union with requested information for bargaining.
Therefore, the Board found, the strike was an unfair labor practice strike.
Therefore, the Board found, the strikers who had offered to return to work had
been unlawfully refused their old jobs.

Regarding the failure to provide information,
the Board found that, by raising its financial condition in any way, Stella
D'Oro at least implied an inability to pay and gave rise to the obligation to
back it up. The employer sought review at the Second Circuit.

The Second Circuit found that the company's
position was based on unwillingness to pay, not inability. Thus, the
company had no obligation to turn over the financial information in the absence
of a showing by the union of a specific need. Then the court said that, even if
the union had had the right to the information, the company complied with its
obligation. In other words, the union didn't have the right to a photocopy –
just to the information. The court noted that the company had legitimate
confidentiality concerns and had informed the union of that. Although the NLRB
has sometimes required employers to provide photocopies when inspection and
note-taking would be insufficient for review of a lengthy document, the court
found that a photocopy was not required in this case because the company had
offered to make the information available through all negotiations.

In sum, the court's finding on the unfair labor
practice charge resulted in complete (albeit lengthy and expensive) vindication
for the company. With no ULP, there was (1) an impasse in bargaining, (2) no
unlawful unilateral implementation of the company's last bargaining proposal,
and (3) no unlawful permanent replacement of the striking employees. Press
reports indicate that the back pay sought here by the NLRB and union was more
than $2 million – and it all hinged on a response to a union information request
for a photocopy of financial records.

A cautionary note -- Judges Jose Cabranes and
Denny Chin, concurring, wrote that the Board's position on this issue could be
upheld in the future. According to these judges, the Board needs to do a better
job of specifying its reasons for finding that a company statement that
operations are unprofitable is tantamount to a claim of "inability to pay." Now
that the NLRB has this road map, you can bet that it will do exactly that to
keep pushing the law to places it has never been. Accordingly, employers in
bargaining may find it prudent to expressly disclaim inability to pay
and expressly assert that they are claiming only unwillingness to pay.

Impact
of NLRB ruling on micro bargaining units expands - In March, the NLRB approved a petitioned-for bargaining unit of
26 employees of a mechanical contractor, Fraser Engineering, by applying the
Board's Specialty Healthcare ruling on
"micro-bargaining" units*. Previously Fraser, the union, and the Board had
agreed that the appropriate unit consisted of 39 employees consisting of the 26,
plus 13 employees performing similar work at a wholly-owned subsidiary. Based on
this prior agreement, the company argued that the unit of 39 employees was still
the appropriate unit. However, the NLRB now disagreed, saying that the Board was
not "bound by prior unit stipulations" and that the prior agreement didn't
matter any more. According to the Board, the petitioned-for unit of 26 employees
was appropriate because the employees shared a community of interest and
"tracked" the employer's own "dividing line" among its employees. Meanwhile, the
Board said, Fraser had failed to show that the other 13 employees shared an
overwhelming community of interest such their exclusion would be
inappropriate.

As this case shows, in just two years since Specialty Healthcare, the Board has changed the "playing field" for
representation elections. In Fraser's case, the union lost when the 39-employee
group voted, but now it will have another shot with a smaller unit. And even
though the 13 are no longer in the unit, will not the election affect them
anyway, given that they had a community of interest with the larger group just
two years ago, with no indication of intervening changes? Labor law
gerrymandering!

*Constangy attorneys are representing
Specialty Healthcare in its challenge to the NLRB decision before the U.S. Court
of Appeals for the Sixth Circuit.

Perez
nominated to Labor; conflict broils. On March 18, President Obama
nominated Thomas E. Perez to become Secretary of the U.S. Department of Labor.
Perez is currently the Assistant Attorney General for the Civil Rights Division
of the U.S. Department of Justice. Like many recent nominees, Mr. Perez has
impressive academic and political credentials but essentially little or no
private sector experience. Among numerous positions, he was a prosecutor in the
Civil Rights Division and was Maryland's Secretary of Labor, with wage and hour
enforcement being one of his responsibilities. He was special counsel and
advisor to the late Sen. Edward M. Kennedy (D-Mass.) on civil rights, criminal
justice and constitutional issues, and served under former Attorney General
Janet Reno during the Clinton Administration. His published quotes indicate that
he will be a reliable friend of organized labor.

Republicans in the Senate may make the
confirmation process difficult for Perez due to vocal and growing concerns about
his past dealings in the Civil Rights Division that involve alleged brokering of
special inside deals to avoid some litigation that the Division feared losing.
Here's the Republican view; here's a Democrat view. (We link, you decide.) Even more
recently, the Republicans have attacked Perez for using his personal email for
government business.

If confirmed, Perez could have a significant
impact on important regulatory and enforcement matters, including programs
regarding employees misclassified as "independent contractors," worker safety,
and new proposed "persuader" regulations under the
Labor-Management Reporting and Disclosure Act. There is no doubt that Perez
knows the field and comes with a perspective more closely aligned with the
interests of organized labor than with the interests of private-sector
employers.

Attorney
Gary Shinners named Executive Secretary of NLRB. On April 12, NLRB
Chairman Mark Gaston Pearce announced the appointment of Acting Executive
Secretary Gary Shinners as Executive Secretary of the Board. Mr. Shinners is an
attorney who has served in various staff positions as well as counsel to Board
Members of both of the major political parties. Mr. Shinners was appointed
Deputy Executive Secretary in 2010 and, since January 2013, was Acting Executive
Secretary after the retirement of the former Executive Secretary Les Heltzer.
Whether this appointment, to a position that primarily involves case-handling
and processing, is subject to challenge for potential lack of a Board quorum is
uncertain. Historically, these appointments have not generated much political
fuss, but the position has been a stepping stone for future Board nominations
and recess appointments.

Union membership update - Drilling down
into the LM-2 Forms that unions filed with the Department of Labor for 2012, the
numbers indicate that membership in eight of the largest 10 labor unions fell in
2012. Membership was down for the National Education Association, the American
Federation of Teachers, the Teamsters, the Service Employees International
Union, the United Food and Commercial Workers Union, the Laborers International
Union of North America, and the International Association of Machinists.
Membership increased for the International Brotherhood of Electrical Workers,
the United Steelworkers, and the United Auto Workers. Published reports indicate
that growth came largely from increased membership from previously represented
non-members, better training opportunities for members, and industry growth
because of economic improvement resulting in recalls of employee-members.
Declines reportedly were due largely to government budget cuts, layoffs, and
facility closings.

THE
GOOD, THE BAD AND THE UGLY

AFL-CIO's
Trumka making news about union blues. In the face of declining union
membership statistics, AFL-CIO President Richard Trumka thinks it is time to
make some changes, according to reports from the union group's Executive Council
winter meetings in Florida. According to press reports, Trumka told reporters
that it was time for the union to admit immediate change was needed if it was
going to remain solvent and relevant: "We've been talking about the crisis that
we're in and the fact that we need to change and ... be honest with ourselves
... it is going to take structural changes. It's also going to take us trying
new stuff." This could mean new creative approaches to organizing, in addition
to increased use of the non-traditional tactics of corporate campaigns and
attacks on executive compensation and more reliance on political
coalition-building with political action committees and special interest
groups.

Disgruntled
employees at the SEIU. Heh. It's been a tough spring for San Francisco
Local 1021 of the Service Employees International Union. The Local's office
staff, represented by Communications Workers Union Local 9404, voted to
authorize a strike against the SEIU for its conduct in contract bargaining.
Ouch! The staff are apparently upset that the SEIU local has been bargaining for
concessions and that there has been no contract since last September. No report
on an actual walkout, but the unhappy staff have a Facebook page asking the SEIU
local to "Walk the Talk." This SEIU local made national news last summer by
shutting down the Superior Court in San Francisco in a one-day strike over the
court's failure to provide it with financial information the SEIU local claimed
was needed for bargaining.

Two unions
get SMART. On March 12, the AFL-CIO granted a charter for a new union
called SMART (International Association of Sheet Metal, Air, Rail and
Transportation Workers). The union is a merger of the Sheet Metal Workers
International Association and the United Transportation Union. The combined
membership of SMART, which has offices in Washington, D.C., and Exeter, Ontario,
is typically found in the rail transportation, shipyard and construction
industries. With industry declines affecting membership numbers and union
finances, consolidation among other unions may be in the cards.

We hope this
union isn't guarding the Treasury Building. The founder and president
of the National Association of Special Police and Security Officers, which
represents private security guards protecting federal buildings, was recently
convicted of multiple counts of mail fraud, theft from a labor organization,
obstruction of justice and union recordkeeping offenses. He used union and
pension funds for his personal expenses, stealing more than $252,000. He also
falsified and destroyed financial records during a grand jury investigation and
failed to file union reports. As this conviction shows, when "the fox is
guarding the hen house," and in this case federal buildings and union funds, bad
and very ugly things can happen.

Head of local
teachers' union gets award for playing hooky – and making thousands of kids
play, too. The American Federation of Teachers-Michigan recently gave
an award to the president of a local for organizing a sickout that put 7,500
kids out of school for a day so their teachers could protest the state's new right-to-work law. The sickout, in the city of
Taylor (about 18 miles from Detroit), forced the schools to close for the day,
and the kids either stayed home or were sent home. Although the Taylor school
district has a $6 million deficit, the local managed to get a 10-year collective
bargaining agreement with a union security clause shortly before the
right-to-work law went into effect. Because the law "grandfathers" union
security clauses in collective bargaining agreements that existed on the
effective date of the law, teachers in Taylor will get a few more years of union
security. An A+ for these teachers! But too bad for the kids.

About Constangy, Brooks & Smith,
LLP
Constangy, Brooks & Smith, LLP has counseled
employers on labor and employment law matters, exclusively, since 1946. A "Go
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